AMR CEO's compensation rises 11 percent to $5.2M

[Bob Owens]

Let's see, Bob. Compensation committee has four members...

Miles is a retired executive from Kraft and Phillip Morris, and has been retired for about 15 years.

Purcell runs an investment fund, and came out of Morgan Stanley as a career banker.

Rodin is a retired academic, and also sits on the board of Citigroup.

Rose is the only active CEO on the committee.

Should I go on?....


Bachman is a senior partner with Edward Jones. Another career investment banker.

Staubach is a real estate investor, and another local (along with Rose).

Korologos... connected to Benedetto, Gartland & Co, another investment bank.

Codina... Used to be in real estate and railroads, but connected to Merrill Lynch & Bank of America

Robinson... had 35 years with subsidiaries of AT&T, but was never CEO of anything significant.

Ibarguen.... the token MIA representative, and his background is in non-profits and journalism.


So there you have it... A bunch of retired folks. Rose is the only contemporary for Arpey (he's a year younger).

Everyone else on the AMR board is over 60. And not a one of them in a position to be gaining from the rising tide of CEO compensation...


Not quite a bunch of stogie puffing CEOs as you'd portray it. Looks to me like they'd seem more at home at the Golden Corral buffet during senior citizen's hour than they would with cigars and Scotch at the Manhattan Athletic Club...

Dont recall saying anything about "stogie puffings CEOs" but it looks to me like you verified what I said, a bunch of executives determining other executives pay with a few Acedemics and celebrities thrown in.

Miles is a retired executive Executive

Purcell runs an investment fund Executive.

Rose is the only active CEO Executive

Rodin is a retired academic Token Acedemic

Three Execitives and a Token Acedemic. How much do these guys make for a days work? All they have to do is vote 'the right way".

 

[eolesen]

Got your tap dance shoes on, I see.....

Your long time assertion, and echoed above in your earlier posts, is that CEOs were determining each others' pay.

I'm sure you are the only person shocked to find that the board is made up of former and retired executives, and that there aren't a couple housewives or fleet service clerks also helping to determine AMRs corporate direction and strategy. Not that they wouldn't be capable, but I suspect the point of having a board in the first place is to provide counsel to the company's executives, and also ensure that the best interests of the shareholders are protected. No, I'm more than certain that is their job....

Honestly, I don't think I'd really want a bunch of shop stewards or retired housewife determining the future of any company I worked for. Save that stuff for the board of a homeowners association or local school board...

 

[Frank Szabo]

... and also ensure that the best interests of the shareholders are protected.

...

OK - I'll grant you that, but when are they going to start?

 

[Frank Szabo]

... snip

Purcell runs an investment fund Executive.

... snip

... and while we are discussing Philip Purcell, let's not forget he was cashiered from his position of CEO at Morgan Stanley before he started the investment fund you're referencing.

Is this the quality of our board?

 

[eolesen]

Purcell left Morgan Stanley mainly because he was old school, and opposed to investing in the sub-prime market and other high risk markets...

And yes, I think that's exactly the type of leadership that you'd want at any bank or corporation, but what do I know...

 

[Frank Szabo]

Purcell left Morgan Stanley mainly because he was old school, and opposed to investing in the sub-prime market and other high risk markets...

And yes, I think that's exactly the type of leadership that you'd want at any bank or corporation, but what do I know...

If that was the case re: Purcell, I stand corrected. All I knew was he got booted.

 

[eolesen]

There were more reasons than just that, but his resistance to change and taking on more risk was a big part of it. There were a handful of senior people who left and launched a PR campaign against him, in part because they weren't earning what their friends at Lehman or Bear Stearns were earning with their risky strategies. He was vindicated to some degree -- Morgan got into sub-primes after he left, and they lost $3.7B in the process. His successor should have been fired... instead, he retired as CEO in 2009 and remained on as chairman.

The following from Forbes might give you a little more insight into Purcell. He's definitely not what I'd call the prototypical banker. As I said earlier, he's more old school than not.

http://www.forbes.com/2010/05/14/morgan-stanley-discover-intelligent-investing-purcell_print.html

 

[chris perry]

Tell me about GUPTA crook? I have been following our former bod.I have to say he looking pretty guilty,after following his friends trial and conviction.
He clearly made some cell phone calls after several bod meetings,wire taps are a ####. Then have your former boss rat you out under oath..... I was wondering E ?

 

[Bob Owens]

Got your tap dance shoes on, I see.....

Your long time assertion, and echoed above in your earlier posts, is that CEOs were determining each others' pay.

I'm sure you are the only person shocked to find that the board is made up of former and retired executives, and that there aren't a couple housewives or fleet service clerks also helping to determine AMRs corporate direction and strategy. Not that they wouldn't be capable, but I suspect the point of having a board in the first place is to provide counsel to the company's executives, and also ensure that the best interests of the shareholders are protected. No, I'm more than certain that is their job....

Honestly, I don't think I'd really want a bunch of shop stewards or retired housewife determining the future of any company I worked for. Save that stuff for the board of a homeowners association or local school board...

You seem to be the one tap dancing. First you say they arent CEOs, despite the fact I didnt say CEO's , you did, I said Executives which your reply verified. Now you are saying of course they are executives because they are the only ones qualified.

I've long asserted that when executives go to the table for their compensation that executives sit on both sides of the table and thats the reason why their pay has accellerated way past inflation, and yes CEOs are executives, suprise! If I didnt use the broader term in the past I did in the post to which you replied.That "Market Conditions" driven by supply and demand has nothing to do with the skyrocketing increase in Executive Compensation because we have more MBAs in this country than ever before , even more MBAs than A&P mechanics, most certainly more MBAs than we have jobs that require an MBA. That point was brought up in response to people like you who try to spin that management pay is determined by demand driven "Market Conditions" when in fact the people on the other side of the table have no real motive to keep pay at the lowest rate possible because they stand to benifit from it because they are a member of that strata that is seeing real compensation go up faster than inflation. Look how AA execs justify their compensation , by what their peers are getting. Peers at companies that are showing profits, they dont even limit themselves to the Airline Industry. Then when we do that, compare ourselves to our peers at UPS, your side comes back with, "You cant compare to them because they make profits" despite the fact that we do the exact same job and have just a little control over what product this corporation chooses to market or how the enterprise is run as they do. The fact is regardless of what side of the table executives sit on they all stand to benifit as long as Executive compensation rises. As far as the retirees go they have a pretty good gig as well, just vote how you are told and they will make sure they get re-elected to the position and continue to collect a years pay for a regular worker for a days work, plus the benefits of free posiitive space travel where they will remove even a revenue passenger to seat them. For a retired Executive, Celebrity or Acedemic that never worked for the airlines thats not a bad deal!

 

[eolesen]

Then when we do that, compare ourselves to our peers at UPS, your side comes back with, "You cant compare to them because they make profits" despite the fact that we do the exact same job

No, what I've said is you can't take the wage component without also applying their work rules and benefits.

A few of us, me included, have said repeatedly that paying you guys WN or UPS wages is justified, if the organizations were similarly sized. But they're not.

If AA had 2x or more executives than any other airline on the planet, you'd have an argument to make, but as I've shown over and over, management staffing, particularly at the executive level, at AMR is at the same levels if not lower than other US airlines.

WN has the same number of VPs and above as AA, within one or two, and they've got half the number of employees, no significant overhaul bases to manage, and operate in just one country... Search the forums if you need the numbers again.

If you want pay parity and to level the playing field, then you have to level the playing field on all aspects of your contract.

 

[FWAAA]

Nonsense. There's no reason that AA cannot pay its AMTs $47/hr (WN) or even upwards of $50/hr (UPS) but retain the parts of the TWU contract that Bob likes.

Oh, except for the fact that AA doesn't have the money for that kind of pay. It's fantasy to think that any AMT in Tulsa or Fort Worth is ever going to earn those wages for scheduled heavy check maintenance.

Line maintenance (including the routine checks that efficiency requires be done where the plane sits overnight) can cerainly get (and deserve) WN or UPS wages. In exchange for that, AA is going to want to lower the pay of those performing the heavy checks in those very low-cost metro areas (Tulsa and Fort Worth).

But instead of trying to solve that pay problem, the leaders continue to focus on irrelevant trivia, like the executives' long-term incentive comp plans and all that transpired in 2003.

 

[Bob Owens]

No, what I've said is you can't take the wage component without also applying their work rules and benefits.

A few of us, me included, have said repeatedly that paying you guys WN or UPS wages is justified, if the organizations were similarly sized. But they're not.

If AA had 2x or more executives than any other airline on the planet, you'd have an argument to make, but as I've shown over and over, management staffing, particularly at the executive level, at AMR is at the same levels if not lower than other US airlines.

WN has the same number of VPs and above as AA, within one or two, and they've got half the number of employees, no significant overhaul bases to manage, and operate in just one country... Search the forums if you need the numbers again.

If you want pay parity and to level the playing field, then you have to level the playing field on all aspects of your contract.

Management levels, at the lower end is higher now than I ever remember it being.

I see now you no longer want to discuss executive compensation or bother to try and justify why it has gone up so much. Thats understandable, there is no justification for the way Executive compensation has soared and I explained a big reason why its happening. You threw something out there, changed what I said and realized you werent getting anywhere with it so now you're trying and shift it away to a different topic.

 

[strikeforce]

No, what I've said is you can't take the wage component without also applying their work rules and benefits.

A few of us, me included, have said repeatedly that paying you guys WN or UPS wages is justified, if the organizations were similarly sized. But they're not.

If you want pay parity and to level the playing field, then you have to level the playing field on all aspects of your contract.

Eric,

I think Bob Owens has a valid argument to compare ourselves to UPS because we do work on the same equipment. Pilots, throughout the industry compare themselves to the equipment they fly, right?

Bob, I'm placing you on the hot seat...........

Bob Owens, if YOU truly believe that WE should be paid wages similar to UPS, then hand AA the UPS contract at the June meeting, and ask them to match it? Will you do that Bob? I don't believe for a minute that YOU or the TWU will do that! If you don't, why not? What or whom is holding you back?

After all, we all know what AA's response will be.......outsource OH. However, if the union is serious about AA mechanics earning the highest wages in the industry, $51 an hour, then the TWU should be ready and agree to farming out OH, if that's what it takes. There will be lots of casualties!!!

The IBT and AMFA are obviously more concerned with preserving the craft and class than flooding the field with non-licensed helpers, right Bob? There's a reason why the IBT and AMFA agreed to the farm outs, right? There's a reason why these unions agreed to preserving wages & benefits over JOBS, right? Do you think the TWU would ever agree to preserving wages & benefits over jobs, Bob?

 

[eolesen]

No, Bob. I'm more than happy to discuss exec comp, aside from the fact I've had better luck getting my yellow lab to recite Chaucer.

You decided that it wasn't fair to have CEOs paid like their peers if you couldn't be paid like your peers. Carmine's post above is spot on. You guys hold that card to play. Hand them the UPS book.

You want equal pay for equal work. That is reasonable. Why shouldn't that apply to execs? Is running a Fortune 500 company less complicated because it is losing money in a hilly competitive industry? Or is the actual work of running the company at various levels about the same regardless if they're turning a profit? I know first hand it is the latter, having worked for AMR and now working for a company that turns double-digit margins... When the company is making money, things tend to run themselves...

There are lots of other factors which you don't ever bother considering (e.g. many execs and senior managers being able to leave for another companies inside and outside the industry, like several of AMRs CFO's had done) or the fact that the owners aren't interested in having to deal with unanticioated senior management turnover and turmoil that can bring).

So, it's not changing the topic. I'm just agreeing with the idea of paying peers like peers when the rules are the same.

I agree that executive comp is higher than it should be, (which I've also said) and an easy target to rally the troops with, but is also a drop in the bucket compared to all the other things wrong with AMR (which I've said ad naseum).

I could go on, but it's time to start Maggie on learning Dickens. Chaucer might be a little too archaic for her.

And maybe FWAAA is right -- you have no choice but to focus on the minutae like this and whether or not airplanes should have been stuffed into a hangar during a hail storm because the real issue of "restore and more" hasn't quite worked out the way you thought it would...

 

[Bob Owens]

Eric,

I think Bob Owens has a valid argument to compare ourselves to UPS because we do work on the same equipment. Pilots, throughout the industry compare themselves to the equipment they fly, right?

Bob, I'm placing you on the hot seat...........

Bob Owens, if YOU truly believe that WE should be paid wages similar to UPS, then hand AA the UPS contract at the June meeting, and ask them to match it? Will you do that Bob? I don't believe for a minute that YOU or the TWU will do that! If you don't, why not? What or whom is holding you back?

It's not my call. As I've told you before I'm a witness who gets to add an opinion.
I dont maintain that at this time that we should get the same as UPS, I asked why we shouldnt? I recognize that we do have to compete with other passenger airlines and we should all set parity with UPS as our objective but we arent going to get there in one negotiations cycle. Why should passenger airlines get a discount on A&P labor? Do they get a discount on landing fees, fuel, aircraft, financing? How about executive compensation reletive to the size of the company as Eoleson says must be a consideration?

I do think we should get at least the same as Southwest. OH is supposedly the reason why we cant get Southwest wages but the company never offered to give us that in exchange for outsourcing. Long before I got there it was determined that the committee would not bring up Southwest, UPS or anybody that didnt go through BK and made a lot more than us. At first I was told that we didnt want to compare because Southwest farms out all their OH, then when we brought up that they dont farm it all out and that all the ones we were still comparing ourselves to also farmed out much of their OH there was a change of heart. I sat there in our meeting at JFK during the "Road Trip" where Gilboy told our members that we could have the Southwest contract but then we would have to have the same headcount per aircraft as southwest, which is rediculous since Southwest doesnt have widebodies or ETOPS.

The current table position is what we (the sub-committee)were given by the full committee.

I was told that UPS mechs were pushing to get a lot more work in house, but the company said that in order for it to be cost effective they could only offer $41/hr, so figure they probably could have paid $47 or so. They went for the money.

After all, we all know what AA's response will be.......outsource OH.

Wrong, AA was given the option to slash all the heads they wanted to back in 2003 instead of the pay concessions, THEY SAID NO.

AA wants it both ways, they want the quality, cost savings and efficiency of doing it in house and they want to pay what 3p providers pay. Over the last decade they've brought more work in house despite the fact that through attrition they could have sent more out. We have around 2000 mechs without system protection as it is, enough to close AFW and DWH.

They have never put forth any information proving that it costs more to do it in house than it would to outsource it. Remember just because AAR may be paying their guys $26/hr that doesnt mean when AA brings their planes to them (another cost) that that is what AAR charges AA for that labor.

The IBT and AMFA are obviously more concerned with preserving the craft and class than flooding the field with non-licensed helpers, right Bob? There's a reason why the IBT and AMFA agreed to the farm outs, right? There's a reason why these unions agreed to preserving wages & benefits over JOBS, right?

When those unions came on to the property those companies already were already farming that stuff out. At the time they didnt have many aircraft (UPS still doesnt) and didnt have the economies of scale to build their own facilities to do OH. (SWA now does but they probably get very good rates due to the fact that they have so many of the same type of Aircraft)

Do you think the TWU would ever agree to preserving wages & benefits over jobs, Bob?

Probably not, but in the end its people like you that accept the deal isnt it? But then again you choose to "resign and distance yourself" from making a commitment to try and challenge and change that and leave people like Gilboy in there as your voice.